UAE Clements Worldwide Situation Report
From Western Protection to Sudden Independence (and Wealth)
Originally under British protection, United Arab Emirates was pushed towards independence in 1968 when the British Prime Minister announced that his country was ending the treaty relationships with the seven sheikhdoms due to an under-equipped military. These sheikhdoms, along with Bahrain and Qatar, found themselves newly independent in 1971. The rulers of Abu Dhabi and Dubai formed a union and invited the five other emirates to join, creating the United Arab Emirates.
Since its independence, the economy in the UAE has grown exponentially. However, the country is extremely dependent on petroleum and natural gas revenues, with 85% of the economy based on oil exports. Dubai recently suffered a significant crisis ending in 2010, and had to be bailed out by Abu Dhabi’s oil wealth. In response to the recent drop in oil revenues, UAE has made cuts to public spending and reduced energy subsidies. Dubai now runs a more balanced budget and is seeing growth in its tourist sector as the top tourism destination in the Middle East. Economic growth is set to be on par with 2015, from 3-3.5% for the year, but that number is closely linked with oil prices so it may fluctuate.
What Type of Government Does it Have?
Established only 45 years ago, United Arab Emirates (UAE) is now a federation of seven emirates: Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah, and Umm al-Quwain. The country is collectively governed by the Federal Supreme Council: a group made up of the absolute monarchs from each emirate. Of the monarchs, one is chosen as President of UAE. Islam is the official religion of the UAE and Arabic is the official language.
Although ruled by a president, the UAE had its first-ever national elections in 2006, with only a small number of hand-picked voters creating the advisory body that “votes.” The New York Times claims the UAE is “an autocracy with the sheen of a progressive, modern state,” as the judicial system is a mix of the civil law system and Sharia law. Sharia law is considered divine law, as expressed through the Quran and Muhammad’s example. Sharia can deal with any range of topics, from crime and trade regulations to hygiene and diet. According to Human Rights Watch, it is discriminatory to women and outlines extreme punishments for any and all offenses, ranging from beheading to crucifixion.
Not an Entirely Rosy Picture
The UAE ranks very low on international indicators of freedom and civil liberties. Freedom House consistently ranks it as “Not Free” on its Freedom in the World Report and it ranks poorly on Reporters without Borders’ Press Freedom Index.
Of the almost 10 million people living in the United Arab Emirates, only 1.5 million are Emirati citizens. Millions of migrant workers and ex-patriatess live in the UAE, creating some unique problems and challenges. Treatment of migrant workers has been called modern-day slavery. These workers are excluded from collective labor rights, unable to go on strike or join trade unions.
Why is the UAE So Attractive to Expats and Will that Change?
The United States and the UAE have always had a close business relationship, mainly because of the lack of corporate or value-added taxes (VAT) in UAE. In mid-2015, many expats and business owners were startled to find out that the UAE is finally drafting tax legislation that may scare away those taking advantage of it as a tax-free haven. UAE began looking into corporate tax and VAT when the oil prices plunged in 2014, but it may be some time before these changes affect the public.
In fact, it may not affect all non-Emirati residents or businesses at all, as the UAE still maintains 38 “Free Zones,” which are isolated lands with special tax, customs, and import laws. Because of these free zones, non-Emirati citizens mostly enjoy a reprieve from the Sharia system and have a fair amount of freedom. The UAE has worked hard to establish a relationship with the United States in particular, building the UAE-U.S. Joint Military Commission in 2005 and working for peace in the region.
Further deepening the relationship, the UAE has always encouraged the U.S.-led military initiatives in the Middle East. During the 1991 Persian Gulf War, it supported the U.S. with air bases and then signed a military defense agreement with the U.S. in 1994. The UAE continued to back the United States, supporting the war against the Taliban in Afghanistan and Saddam Hussein in Iraq.
The UAE made news this week when it stated its readiness to send ground troops to Syria as part of an international coalition to fight the Islamic State of Iraq and the Levant (ISIL) group, a top official has said. "Our position throughout has been that a real campaign against [ISIL] has to include a ground force," the UAE's Minister of State for Foreign Affairs Anwar Gargash said at a news conference in Abu Dhabi on Sunday. This follows an announcement by Saudi Arabia just days earlier stated it was also prepared to deploy troops, although both commitments seem dependent on greater U.S. involvement on the ground with Gargash stating that “US leadership on this” would be a prerequisite for the UAE. The Obama administration, however, has not changed its stance on increasing its ground troops in Syria, which begs the question -- what is the UAE hoping to accomplish with this announcement? Additionally Saudi Arabia’s focus is on toppling Syrian President Assad, rather than fighting ISIS, which is not in line with US objectives.
The United Arab Emirates also spends heavily to influence U.S. domestic debate and policy, with a focus on building security and peace in the Middle East and the economic opportunities available in the UAE. Also, the UAE pays its former government officials to carry out its agenda with the United States. It is perhaps this relationship that allows the United States to overlook some of the human rights abuses and Sharia legal system in the UAE.
To keep up to date on what is going on in the UAE, check out the United Arab Emirates Risk Assessment Country Guide.
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